Strategic exploitation of a common resource under environmental risk
AbstractWe study the effect of environmental risk on the extraction of a common resource. Using a dynamic and non-cooperative game in which an environmental event impacts the renewability and the quality of the resource, we show that the anticipation of such an event has an ambiguous effect on extraction and the tragedy of the commons. A risk of a reduction in the renewability induces the agents to extract less today while a risk of a deterioration in the quality has the opposite effect. Moreover, when environmental risk induces conservation, the tragedy of the commons is worsened.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Dynamics and Control.
Volume (Year): 37 (2013)
Issue (Month): 1 ()
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Web page: http://www.elsevier.com/locate/jedc
Conservation; Dynamic games; Environmental risk; Renewable resources; Tragedy of the commons;
Other versions of this item:
- Eric Fesselmeyer & Marc Santugini, 2009. "Strategic Exploitation of a Common Resource under Environmental Risk," Cahiers de recherche 09-08, HEC Montréal, Institut d'économie appliquée, revised Feb 2012.
- Eric Fesselmeyer & Marc Santugini, 2011. "Strategic Exploitation of a Common Resource under Environmental Risk," Cahiers de recherche 1131, CIRPEE.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D90 - Microeconomics - - Intertemporal Choice - - - General
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
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